The slowest economic growth in more than five years has failed to dent Britain’s jobs market, with the latest official figures showing a record employment rate in the first three months of 2018.
The Office for National Statistics said there were 32.34 million people in work in the first quarter of the year, an increase of 197,000 on the previous quarter and up by 396,000 on the first three months of 2017.
Although initial estimates suggest the economy grew by just 0.1% in the the first quarter of 2018 – its weakest since 2012 – the UK’s employment rate rose by 0.4 points to 75.6% in the latest quarter, the highest since modern records began in 1971. A majority of jobs created were full-time posts.
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Unemployment on the internationally agreed definition fell by 46,000 to 1.42 million between the fourth quarter of 2017 and the first quarter of 2018. The unemployment rate of 4.2% was the joint lowest since 1975.
There was a more mixed picture for wages. Growth in total pay in the first quarter of 2018 was up by 2.6% on a year earlier, slower than the annual rise of 2.8% recorded in the three months to February.
Regular pay – which excludes bonuses – was 2.9% up on a year ago, a slight increase from the 2.8% annual increase reported the previous month.
The ONS said that once inflation was taken into account, real regular pay was up by 0.4% on a year ago while total pay was flat.
Esther McVey, the secretary of state for work and pensions, said: “Since 2010 we have seen 3.2 million more people move into work right across the UK. Youth unemployment has fallen by more than 40% and the unemployment rate at its joint lowest since 1975.
“Today’s figures once again cement that turnaround, with an employment rate of 75.6%, and on average over 1,000 people each and every day, since 2010, getting a job.
“With wages growing faster than inflation and increases in the personal tax allowance, not only are more people bringing home a pay packet but they are keeping more of their hard earned money for themselves and their families.”
Senior ONS statistician Matt Hughes said: “With employment up again in the three months to March, the rate has hit a new record, with unemployment remaining at its lowest rate since 1975.
“The growth in employment is still being driven by UK nationals, with a slight drop over the past year in the number of foreign workers. It’s important to remember, though, that this isn’t a measure of migration.”
James Smith, an economist at ING bank, said the strong labour market data made an August interest rate increase from the Bank of England more likely.
“As markets become increasingly sceptical about the prospects of a UK rate hike this year, the latest wage data could prompt a bit of a rethink.
“At 2.9%, earnings growth excluding bonuses is now running at the fastest rate since mid-2015 and will make the Bank of England more confident that their optimistic stance on wage growth is bearing fruit. Remember that survey evidence from Bank of England agents has been pointing to the best year for pay settlements since the crisis.”
Ruth Gregory, a UK economist at Capital Economics, said she also expected only a brief delay before Threadneedle Street increased borrowing costs.
“March’s labour market figures provide us with optimism that sustained rises in real pay are in prospect and will place more pressure on the MPC to hike interest rates soon,” she said.
“Indeed, employment rose by a whopping 197,000 in the three months to March, well above the consensus expectations of a 130,000 rise and the biggest quarterly rise since the end of 2015. This left the annual rate of employment growth at a solid 1.2%.”